Superannuation Guarantee & Salary Sacrificing
Superannuation has always been about Future Money. Money stored away for your future.
Your super is your future. Payments towards that future is known as a super guarantee contribution or concessional (pre-tax) contributions.
You also have the ability to make Voluntary contributions on top of this amount. Boosting your super by adding your own contributions. This is known as a Personal super contribution that is taken from your “take home pay.”
Although a recent change took effect from January 1st, 2020.
From January 1st, 2020, salary sacrificed super contributions cannot be used to reduce your legal super guarantee obligations. It won’t matter how much in a dollar amount an employee elects to salary sacrifice.
This simply means, the salary sacrificed amount by an employee will not count towards the super guarantee obligations.
Additionally to this change, the super guarantee which is currently set at 9.5% of the Employees OTE base, includes the following:
- The employees OTE
- The Amount salary sacrificed from the Employees OTE.
Using Superannuation Towards A Property Purchase
The Australian Government has initiated the First home super saver scheme. As part of this scheme, and to help you save towards your first home purchase, you are able to enter into a salary sacrifice arrangement with your employer to make voluntary contributions or make voluntary personal super contributions yourself.
Once you have made voluntary contributions, you are able to withdraw either 100% of the after tax amounts or 85% pf the pre tax amounts.
Before progressing to making the purchase you need to make sure you have undertaken a few steps and taken note of a number of key points:
- Make a valid request to receive release your savings. This means you need to Apply to released the saved amount
- Avoid signing a contract of purchase until you have a valid request to release the amounts of money saved
- Note that there may be limits to the released amounts. Check this before signing any legal documents to purchase the home.
- Note you can only apply for a release once and cannot claim further tax deductions on the non concessional contributions included in the determination.
- Best to always double check the amount you have contributed to avoid disappointment, prior to commencing the process.
- Tax will be withheld appropriately on the amount released
- It could take up to 25 business days for the funds to be released and then for it to be paid to you.
- Once the funds have been released to you, you have up to 12 months to purchase or construct a home and premise can only be located in Australia. A number of types of premises are not included and as such check with Pherrus on what is not counted.
- You must genuinely intend to occupy the property.
And many other considerations, such as how your Tax Return will need to be constructed and what other obligations you have.
If you have any questions regarding the First home super saver scheme, give the Pherrus Office a call or book a meeting to discuss your options.